Here's The Backstory On Samsung's Latest $200 Million Acquisition

Steve Kovach, provided by

Published 12:53 pm, Friday, August 15, 2014

Samsung announced Thursday that it will buy a startup called SmartThings, a company that makes a software platform that lets you control household appliances over the internet through your smartphone, tablet, or computer.

We've heard (and so have others like Kara Swisher of Re/code) Samsung will pay about $200 million to buy SmartThings.

SmartThings will continue to run independently, but it's relocating from Washington, D.C. to Palo Alto, Calif. to be near Samsung's Open Innovation Center, where Samsung incubates startups and researches new technologies.

In an interview with Business Insider in June, SmartThings CEO Alex Hawkinson said he wouldn't want to sell SmartThings to a tech giant unless he had a guarantee he could remain independent and expand the platform to other devices, no matter who the manufacturer is.

That seems to be what Samsung has planned for SmartThings.

"We believe in open," said David Eun, the head of Samsung's Open Innovation Center, in an interview with Business Insider Thursday. "Consumers have different devices from different companies in their homes. You can, as a consumer electronics company, work to have those devices work together. What's really needed is a company like SmartThings that has a software platform that can connect all these devices."

Samsung's scale has a lot to do with it too. You may be familiar with Samsung's smartphones and TVs, but it also makes refrigerators, dishwashers, vacuums, and pretty much everything else that runs on electricity. Eun said Samsung's appliance business is one of the company's fastest-growing segments in the U.S. SmartThings now has an opportunity to tap into that.

"Look at the scale. Samsung sells two TVs per second. They sell 12 or 13 mobile phones per second. That's staggering ," Hawkinson told Business Insider Thursday. "It wasn't about the money. It was about the opportunity."

The deal happened when Samsung came to SmartThings to discuss how the two companies could partner together to bring the SmartThings platform to Samsung's array of household electronics. But as the two began a partnership, Eun realized an acquisition was the best way for Samsung to really tap into SmartThings' potential.

"I think we really had like minds on being open in our approach," Eun said. "Initially we were exploring a partnership. But we realized there were so many opportunities and scale that only an acquisition could provide. It just works all around."